Marriage is an integral part of getting ahead, the beginning of a life-long commitment. Indians fancy grand luxurious children’s weddings; after all, marriage is a monumental occasion. With all the glamour and grace of a ‘Big Fat Indian Wedding’, as we call it, comes the heavy burden of meeting all the financial expenses on time.
What can be done to meet hefty wedding expenses?
A Times of India article shows that most Indians do not save enough, and around 50% save only 0-20%. This is shocking and disturbing, as people cannot meet crucial financial obligations despite working so hard.
To support significant events, like your children’s wedding, you must consider investing and accumulating money in a fund. This way, you will cut down on unimportant expenses and focus on what is truly meaningful. The budget you ultimately set depends on several factors; however, it is essential that financial planning is done correctly so that the execution is not a burden.
What funds to opt for your children’s wedding?
There are several kinds of funds out there, and all have their respective risk appetites and return generating capabilities. When you are saving up for your children’s marriage, you should select a risk-averse fund. However, the downside is that the fund will not match the competitive returns offered by risky investment options. Considering the importance of the occasion, it would help if you still invested in a risk-averse asset that provides regular returns over a long period. The idea is to generate consistent returns to meet the expenses with ease. Your main objective must be to save the invested capital, as you cannot afford to be in the red. Let go of the urge of earning a higher-than-average return and instead focus on stability and scalability.
Let us have a look at some funds you can opt for your children’s wedding:
1) Systematic Investment Plans (SIP)
An SIP is a great way to inculcate saving habits as you invest a fixed sum regularly over a long period. You can set the investment interval – weekly, monthly or even quarterly, and the money invested keeps compounding in value. As SIPs work on the concept of time value, the amount you will be required to chip out every time you invest will not take a toll on your pocket. And, when the wait is over, and the wedding is due, you will have accumulated the exact amount of money you are to spend on an extravagant wedding.
2) Public Provident Fund (PPF)
The Government of India introduced the PPF, i.e. the Public Provident Fund facility, in 1968, and it is still one of the best investment options available for Indians, irrespective of their income class. Almost every individual in India has a PPF account, as it teaches the importance of regular savings and provides a tax benefit to the depositors. You can open a PPF account for your long term savings needs, like meeting the expenses of a child’s marriage. As this is a Government facility, there is no risk involved. Interestingly, despite the almost nil risk associated with a PPF deposit, the interest rate is relatively high, enabling you to implement your financial plans smartly.
Nowadays, you can open a PPF account online with your desired bank with a minimum deposit of Rs.100. Furthermore, the Public Provident Fund is one of the rare facilities under the tripe E category, i.e. Exempt-Exempt-Exempt. All the deposits made are deductible under section 80C of the Income Tax Act of the GOI up to a maximum of Rs.1,50,000. The accumulated balance and the interest income are not chargeable to tax as well.
With the help of smallcase, you will create a diversified portfolio for yourself to meet your long-term goals. Smallcases are portfolios of stocks and exchange-traded funds (ETFs) that experienced professionals bring together based on an idea or a theme. You can customise your own smallcase or choose from pre-existing portfolios. Since your goal is to fund your children’s marriage, you must strive to balance risk and returns. Don’t bet too heavily on high-risk investment instruments, as you are saving up for a significant occasion. While investing in a smallcase, the control is always in your hands, and you can restructure and rebalance your portfolio holdings depending upon the market happenings and adjust your risk appetite accordingly.
4) National Saving Certificates
An NSC is a post-office product offering and can be opened with any post-office branch. It is a fixed income instrument with shallow risk, beneficial for small and mid-level income earners. An investment of Rs.1,50,000 will earn up a deduction under section 80C of the Income Tax Act; however, there is no cap on the amount you can invest in a National Saving Certificate. These certificates come with a maturity period of 5 years. They are an excellent opportunity for anyone looking to save money, grow with the benefits of interest income and save tax along the way.
ELSS stands for Equity-linked savings scheme and is a mutual fund eligible for deduction under section 80C of the Income Tax Act. This fund has a lock-in period of only three years, the shortest of all the other instruments offering a Section 80C deduction. 65% of the portfolio value is invested in equity, which gives the fund the potential to beat inflation and provide excellent returns to investors.
6) Fixed Deposit Scheme
A fixed deposit scheme is a great way to grow your money safely, and it is offered by banks and NBFCs – called bank and corporate fixed deposits, respectively. Depending on your money needs, you can opt for a cumulative or a non-cumulative scheme and even have a laddering strategy set up to meet both short-term and long-term needs.
Personal financial planning has gained immense importance in these uncertain times. Everyone witnessed the harshness of the pandemic and faced the troubles it caused financially. When it comes to your children’s marriage event, you shouldn’t have to compromise on a grand wedding just because of financial issues. That is why making a plan for your future needs becomes very crucial. Make a plan and invest in less-risky funds for meeting all your unavoidable financial commitments.